The audit negotiation

Preparation in the black-art kingdom

Before this week’s negotiation simulation took place, I spent one day to research on negotiation tactics and decided the best approach to persuade my partner.

Since I had already read the book by Ronald Dawson “The secret of power negotiation”, I ran through many combinations in my head. I even considered black-art tactics such as initial extreme offer, the long silence, or lessening my partner patience by being an asshole.

However, these tactics failed to materialise because our prof, who “happened” to collect almost all famous published books about negotiation, “happened” to tell the whole class about these approaches. So similar to the previous simulation, I went into battle with no concrete plan because what I prepared had all been busted.

The last thing I could count on was my patience. And luckily, I seemed to possess a bit more of that compared to my partner.

Going into battle. Or is it?

For this week negotiation, we received a complex one with 8 issues. And if we couldn’t agree on ALL 8 terms, we would reach an impasse despite whatever amount of effort we spent. To make matters worse, there was a pre-defined range that we had to succumb to. For example, my goal as a buyer was to get a price as cheap as possible. Yet, there was a cap of $220,000. That meant even if I achieved $210,000, it would still count as a failed term and as such, the contact could not be signed.

I figured out that if I couldn’t understand what my partner value, I would never been able to find a leverage to help boost my favourable issues. In order to achieve that, I would need to trust my partner to be a rational negotiator and approach the game with the mindset of finding a common ground for our problem. A typically nice-guy approach isn’t it? I thought that it would be easy to implement. Yet, emotion swings bigger than I expected.

I set out by asking her whether she had any preferred issue that she wanted to discuss. But she did not have one and instead through me a very high price of $320,000. The max I could take was $270,000!!! That was way above my range. Hence, I got defensive and we began nitpicking over the audit fee.

I was much more cautious in cooperating with her. What followed was very similar to the coffee negotiation where I tried to decline every concession she gave and insisted on a different open price. We got stuck in that issue for almost 15 mins and we didn’t reach a conclusion.

At that moment, my partner started talking about how tiresome this negotiation was. And that stroke me really hard! What had I done?

Basic user experience strategy: listen to your user

I stupidly fell into my own trap of playing the mind game too much and forgot about helping her out. I forgot to consider one simple situation that we could have 2 different ranges and therefor lead to her extreme initial offer.

Instead, I thought that she was trying to use the black-art on me! What was more horrible was that I spent 1/3 of the time allowed bargaining over 1 issue in the total 8!!!

I was supposed to be listening to her problem and find out her painful issues. Had I allowed her to talk, we wouldn’t have wasted that much time. Had I allowed her to talk, I could align our benefits and reach for a total bigger piece (or a win-win game).

I went back to my root in user experience design and treated the negotiation as a problem finding session. It changed the course of the negotiation to a better path.

I took a deep breath. That helped calming me down a bit. After that, I started telling her what I was most concern about and which issues I could be more lenient. She did become more opened and we quickly reach agreement on 4 issues. These 4 issues later turned out to be compatible issues and integrative issues. We got the best total outcomes for these problems!

Be patient, m’young lady!

However, since time started to run out, she became more rushed and lost her calmness (which I believe is the only thing you shouldn’t lose during a negotiation!). She looked more nervous and concerned about time than me. Thus, I knew that I could win this by refusing to comply to any of the 4 remaining issues and push these very near to the closing time.

We didn’t have a deal when we walked back to class! This meant that we agreed on an impasse, an undesired state, even though my total gained point was above 3000 (my resistance point). I knew that I was greedy but I decided to take the risk since I had always been an adventurous guy.

Thus I made her the final suggestion before we entered the class: I would trade my audit fee (which gave the highest point among the 8 issues and also happened to be her most important issue) for the other 3 issues. Very quickly, I had her agreed on my favorable term for the other 3 issues. The total point gained from the 3 issues was far above the point I lost for the audit fee. This resulted in me arriving at 5800pts and her getting 4600pts. I was on the better side of the deal once again!

I like both negotiation simulations I had until this point because they gave me one hell of a mind challenge. Being able to turn the situation around on your feet is a very excited feeling that I would always dive in.

However, for this audit simulation, I and my partner were 400pts away from the optimal score. That was a bit sad. I could have realised the nature of the game, a win-win one, earlier and wouldn’t waste 15 mins. That would give me more time to set up and discuss over integrative terms.

On the similarity of negotiation and design

During the debrief, my prof mentioned something really fascinating:

That things could be very complex but easy and those seemed simple could be immensely hard to get right.

This idea synchronise with me strongly since it is the basic motto in design that I’ve practiced for quite awhile:

Achieving simplicity without losing context.

In fact, it is quite common to see “designers” and product makers jam a bunch of functions into their applications. Imagine Photoshop or Microsoft Powerpoint and you will get my point. Those are very polished and complex applications. It’s easier to put both functions into a design instead of killing one. But that doesn’t make a product better. It makes the product more complex. And most of the time confusing to beginners.

Negotiation is the same. Between the 2 simulations, I believe the audit negotiation is more complex with 8 problems but easier to “get away” since you can trade off issues. So negotiators are generally happier because they can tell their boss that even they don’t get the price right, they achieve “some other terms”.

However, for this type of integrative negotiation, it’s harder to reach a win-win situation, which, to me, is the only true win when you play this game. Reaching a win-win situation enlarges the total piece for both parties and allow them to walk away with a good relationship.

To be able to achieve win-win, you got to be really understanding and listening to your partners. But that’s easier talk than done since we all have our ego. I almost lost the big picture during my audit negotiation!

And when you reduce the number of terms you negotiate for, the whole game becomes simpler since you only have a few terms to focus on. However, as seen with the coffee simulation, it’s harder for negotiators since they are fighting over scarer resources with lesser trade-offs available.

The best strategy is only achieved if you know what game you are playing.